Distribution of Wealth, Income and Power in America: Statistics

[Baobab]

http://www2.ucsc.edu/whorulesamerica/power/wealth.html

by G. William Domhoff

Excerpt:

This document presents details on the wealth and income distributions in the United States, and explains how we use these two distributions as power indicators. The most striking numbers on income inequality will come last, showing the dramatic change in the ratio of the average CEO's paycheck to that of the average factory worker over the past 40 years.

First, though, some definitions. Generally speaking, wealth is the value of everything a person or family owns, minus any debts. However, for purposes of studying the wealth distribution, economists define wealth in terms of marketable assets, such as real estate, stocks, and bonds, leaving aside consumer durables like cars and household items because they are not as readily converted into cash and are more valuable to their owners for use purposes than they are for resale (see Wolff, 2004, p. 4, for a full discussion of these issues). Once the value of all marketable assets is determined, then all debts, such as home mortgages and credit card debts, are subtracted, which yields a person's net worth. In addition, economists use the concept of financial wealth -- also referred to in this document as "non-home wealth" -- which is defined as net worth minus net equity in owner-occupied housing. As Wolff (2004, p. 5) explains, "Financial wealth is a more 'liquid' concept than marketable wealth, since one's home is difficult to convert into cash in the short term. It thus reflects the resources that may be immediately available for consumption or various forms of investments."

We also need to distinguish wealth from income. Income is what people earn from work, but also from dividends, interest, and any rents or royalties that are paid to them on properties they own. In theory, those who own a great deal of wealth may or may not have high incomes, depending on the returns they receive from their wealth, but in reality those at the very top of the wealth distribution usually have the most income. (But it's important to note that for the rich, most of that income does not come from "working": in 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries. See Norris, 2010, for more details.)

http://www2.ucsc.edu/whorulesamerica/power/wealth.html

( incredibly the bottom 40 percent of all Americans own just 0.3 percent of the wealth of the country. )

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Further Information

You can download a PDF of the complete 2012 paper by Edward Wolff at http://appam.confex.com/data/extendedabstract/appam/2012/Paper_2134_extendedabstract_151_0.pdf.

The Census Bureau report is on line at http://www.census.gov/hhes/www/wealth/wealth.html

The World Institute for Development Economics Research (UNU-WIDER) report on household wealth throughout the world is available at http://tinyurl.com/wdhw08; see the WIDER site for more about their research.

For good summaries of other information on wealth and income, and for information on the estate tax, see the United For A Fair Economy site at http://www.faireconomy.org/. Their research on CEO pay can be found here: http://www.faireconomy.org/issues/ceo_pay

For some recent data on taxes from a variety of angles -- presented in a number of colorful charts and graphs -- the Center on Budget and Policy Priorities created a page entitled "Top Ten Tax Charts" in April 2011. http://www.offthechartsblog.org/top-ten-tax-charts/

The New York Times ran an excellent series of articles on executive compensation in the fall of 2006 entitled "Gilded Paychecks." Look for it by searching the archives on NYTimes.com. http://topics.nytimes.com/topics/news/business/series/gilded_paychecks/index.html

For a brief 2010 account by tax expert David Cay Johnston on how the owners of oil pipelines have avoided taxes for the past 25 years simply by converting from the corporate form of ownership to partnerships, check out his brief video on YouTube. For the full details, see his column on taxanalysts.com.

To see a video of Ed Woolard giving his full speech about executive compensation, go to http://www.compensationstandards.com/nonmember/EdWoolard_video.asp (WMV file, may not be viewable on all platforms/browsers)

The Shapiro & Friedman paper on capital income, along with many other reports on the federal budget and its consequences, are available at the Center on Budget and Policy Priorities site: http://www.cbpp.org/pubs/recent.html

The AFL-CIO maintains a site called "Executive Paywatch," which summarizes information about the salary disparity between executives and other workers: http://www.aflcio.org/corporatewatch/paywatch/.

Emmanuel Saez, Professor of Economics at UC Berkeley, has written or co-authored a number of papers on income inequality and related topics: http://elsa.berkeley.edu/~saez/

An update on the lack of wage growth in the 2007-2010 recession ("Recession hits workers' paychecks&quot can be found at the Web site of the Economic Policy Institute. http://www.epi.org/publications/entry/bp277

[JDPriestly]

1. Bookmarked and recommended. Thanks for all the links to research on this.

[davidcay]

2. minor nits facts above and a working link

Thanks for the nice mentions above from Bill Domhoff.

The pipelines don't just avoid the corporate income tax. Legally they collect the grossed up tax (54% rate not the usual 35% rate) and they KEEP the tax money because they are exempt from this tax under the 1986 Tax Reform Act. I estimate the cost at more than $3 billion per year; Congress says $1.9 billion. Either way its a lot of dough.

The correct link to my first of many columns and articles explaining how they do this and its economic effects is here:

http://www.taxanalysts.com/taxcom/taxblog.nsf/Permalink/UBEN-86LJ4E?OpenDocument

David Cay Johnston

[Beethoven1111]

3. Intrigued

I've gotta say I am intrigued by this I will likely be reading. .. .